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Characterizing the Sustainability Problem in an Exhaustible Resource Model

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Author Info

  • Tapan, Mitra

    ()
    (Department of Economics, Cornell University)

  • Asheim, Geir B.

    ()
    (Dept. of Economics, University of Oslo)

  • Buchholz, Wolfgang

    ()
    (Department of Economics, University of Regensburg)

  • Withagen, Cees

    ()
    (Department of Economics, VU University Amsterdam)

Abstract

The Dasgupta-Heal-Solow-Stiglitz model of capital accumulation and resource depletion poses the following sustainability problem: is it feasible to sustain indefinitely a level of consumption that is bounded away from zero? We provide a complete technological characterization of the sustainability problem in this model without reference to the time path. As a byproduct we show general existence of a maximin optimal path under weaker conditions that those employed in previous work. Our proofs yield new insights into the meaning and significance of Hartwick's reinvestment rule.

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File URL: https://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2012/Memo-08-2012.pdf
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Bibliographic Info

Paper provided by Oslo University, Department of Economics in its series Memorandum with number 08/2012.

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Length: 40 pages
Date of creation: 05 Mar 2012
Date of revision:
Handle: RePEc:hhs:osloec:2012_008

Contact details of provider:
Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Phone: 22 85 51 27
Fax: 22 85 50 35
Email:
Web page: http://www.oekonomi.uio.no/indexe.html
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Keywords: Sustainability; Maximin;

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References

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  1. Cairns, Robert D. & Long, Ngo Van, 2006. "Maximin: a direct approach to sustainability," Environment and Development Economics, Cambridge University Press, vol. 11(03), pages 275-300, June.
  2. Wolfgang Buchholz & Swapan Dasgupta & Tapan Mitra, 2005. "Intertemporal Equity and Hartwick's Rule in an Exhaustible Resource Model," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(3), pages 547-561, 09.
  3. Asheim, Geir B. & Buchholz, Wolfgang & Hartwick, John M. & Mitra, Tapan & Withagen, Cees, 2005. "Constant savings rates and quasi-arithmetic population growth under exhaustible resource constraints," Memorandum 23/2005, Oslo University, Department of Economics.
  4. Martinet, V. & Doyen, L., 2007. "Sustainability of an economy with an exhaustible resource: A viable control approach," Resource and Energy Economics, Elsevier, vol. 29(1), pages 17-39, January.
  5. Burmeister, Edwin & Hammond, P J, 1977. "Maximin Paths of Heterogeneous Capital Accumulation and the Instability of Paradoxical Steady States," Econometrica, Econometric Society, vol. 45(4), pages 853-70, May.
  6. Tapan Mitra & Geir B. Asheim & Wolfgang Buchholz & Cees A. Withagen, 2012. "Characterizing the Sustainability Problem in an Exhaustible Resource Model," CESifo Working Paper Series 3758, CESifo Group Munich.
  7. Mitra, Tapan, 2002. "Intertemporal Equity and Efficient Allocation of Resources," Journal of Economic Theory, Elsevier, vol. 107(2), pages 356-376, December.
  8. ZUBER, Stéphane, 2010. "Justifying social discounting: the rank-discounted utilitarian approach," CORE Discussion Papers 2010036, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  9. Withagen, Cees & B. Asheim, Geir, 1998. "Characterizing sustainability: The converse of Hartwick's rule," Journal of Economic Dynamics and Control, Elsevier, vol. 23(1), pages 159-165, September.
  10. Dasgupta, Swapan & Mitra, Tapan, 1983. "Intergenerational Equity and Efficient Allocation of Exhaustible Resources," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 24(1), pages 133-53, February.
  11. Dixit, Avinash & Hammond, Peter & Hoel, Michael, 1980. "On Hartwick's Rule for Regular Maximin Paths of Capital Accumulation and Resource Depletion," Review of Economic Studies, Wiley Blackwell, vol. 47(3), pages 551-56, April.
  12. Geir B. Asheim & Tapan Mitra, 2009. "Sustainability and Discounted Utilitarianism in Models of Economic Growth," CESifo Working Paper Series 2521, CESifo Group Munich.
  13. Hartwick, John M, 1977. "Intergenerational Equity and the Investing of Rents from Exhaustible Resources," American Economic Review, American Economic Association, vol. 67(5), pages 972-74, December.
  14. Cass, David, 1990. "Indefinitely sustained consumption despite exhaustible natural resources," CEPREMAP Working Papers (Couverture Orange) 9027, CEPREMAP.
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Cited by:
  1. Robert D. Cairns & Vincent Martinet, 2012. "An Environmental-Economic Measure of Sustainable Development," EconomiX Working Papers 2012-2, University of Paris West - Nanterre la Défense, EconomiX.
  2. Tapan Mitra & Geir B Asheim & Wolfgang Buchholz & Cees Withagen, 2012. "Characterizing the Sustainability Problem in an Exhaustible Resource Model," OxCarre Working Papers 083, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.

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